M&Ms & broker dealers have REG SHO defining the time frames which they can not deliver shares traded. As I recall (should re-read) some of my old posts to refresh my senior brain now days. 3 days to show up on failure to deliver short list and 13 days till penalties.
So answering your question is they can naked short, but not for ever, like they use to, 70's 80's 90's, in days of old.
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